CASE SELECTION

This study is predicated on the rentier state theory. This was first postulated by HosseinMandavy in 1970 who characterized the rentier state as “Those countries that receive on a regular basis substantial amounts of external rents. External rents are in turn defined as rentals paid by foreign individuals concerns of government to individuals, concern of government of a given country”.

Based on his study of Middle Eastern oil rich states,Mandavy identifies the importance of economic situations where “oil revenue received by the government of the oil exporting countries have little to do with the production process of their domestic economic” and, “The input from the local economies other than the raw materials are insignificant”.

A rentier state, as asserted by Belawi and Luciani(1987) is used to classify those states that earned all substantial portion of revenues from rent paid by external clients and which creates in the same process a rentier mentality and rentier class in these states. The economic behavior of a renti\er state “embodies a break in work reward causation reward of income and wealth for the rentier do not come as a result of work rather than a chance of situation” (Douglas Yates, 1996).

FareedZakaria has poised that such fail to develop politically because in the absence of taxes, citizens have less incentive to place emergence of the new oil states and their increasing importance in world trade in 1970 brought a renewed interest in thinking on rentier economies in the aforementioned discipline of political science and international relations.

According to Obi(2009),the rentier thesis characteristics states that is not revealed to

enclave of externally oriented oil industry that alienates the states from the society, making her aloof from the people and also because the externally earned rents are concentrated in few hands(the political science), making for a particular kind of political economy that feeds corruption and subtracts democracy and development. Hence, in a rentier the infrastructural development and growth of local industries are neglected and undermined.

Ross (in Shaw 2013) identified three key ways which rentierism manifest. These are, the “rentier effect” the “repression effect” and the “modernization effects”. The rentier effects” implies that oil revenues are often used by states to relieve social pressure that might otherwise from the basis of opposition”. The “repression effect” implies that oil wealth enables government to invest in security apparatus to either protect their own position or the extract of resources.

APPLICATION OF THEORY

The rentier state theory could be perfectly used to analyze and explain particularly the cause of economic recession and its management by the Nigeria state. There is nothing experimental about Nigeria current economic crisis. It is simply the manifestation of years of state dependence on revenue from volatile commodity that is crude oil, a persistently unhealthy domestic business environment, external trade stock willful dysfunction between fiscal and monetary policies and lack diversified exports policy to book foreign exchange earnings (Budget, 2017)

The rentier character of the Nigeria state is seen in its over dependence on crude oil as the major source of revenue for the country and formulation of policies that are influenced and determined by the dynamic in the oil sector.The discovery of oil quantity in Nigeria, the 1950 remained the mainstay of Nigeria economy to the determent of other sector of the economy especially with the oil boom experienced in 1970 as a result of the dependence on oil revenue most reforms of the

Nigerian government have continued to be determined by rent collected from sale of oil to external client and effort to retain such rents.

According to Udom(2016) divestment, stable oil production and expansion of economy are part of strategic plan of the Nigerian government to hall the troubled economy out recession and restore growth.

According to Okoli (2015) the volume of crude oil produced in Nigeria and rent earned is so high that the country ranks as the 8^th largest oil producer in the World and one of the leading oil producer in Africa accounting (2009) for over 3 percent of the entire global production (Soludo, 2005, Energy Information Administration(EIA), 2009). He further stated that over the years oil has continued to displays other products as a major source of revenue and export earnings for the country. For instance, 2010 oil accounted for over 96% of total export, similarly oil as a percentage of total government revenue was 78% in 2009, while oil as a percentage of GDP increased from 0.9% in 1960 to over 36% in 1990.

Regardless of the huge profit generated from the oil sector, the Nigerian government has failed to build adequate refineries and companies to refine crude oil for local consumption. Its export of unprocessed crude oil for domestic consumption has deepen the dependent nature of the Nigeria state and encourage the dominance of few multinational companies extracting crude oil for external economy. The existing refineries are moribund and cannot meet the local demand for petroleum products in the country. The extractive activities of these external clients have no linkage with other sectors of the economy and therefore cannot stimulate economic activities in the real sector of the economy (Okoli, 2015).Inadequate funding and investment and agriculture from oil and gas wealth has left Agricultural Sector in lurch and uncompetitive to promote

forward and backward linkage. This has hindered the much needed transformation of the economy in the last four decade. (Sanusi,2010).